Why is it not sufficient to state that a merger should occur simply because the economic gains are positive?
A) Gains are typically of an accounting nature.
B) Shareholders of the target firm may capture all of the gains.
C) Merger costs should be negative after discounting.
D) The merger's gain must also exceed its NPV.

Question

Quizplus · Accepted Answer

The economic gains from a merger might be positive, but if the shareholders of the target firm capture all of these gains, the acquiring firm's shareholders may not benefit.

Why Is It Not Sufficient to State That a Merger